Medicare Compliance & Reimbursement

Good news: CMS has learned how to stretch a dollar.

That Medicare Part A needs additional funding is clear from the latest Medicare Trustees’ Report which indicates that it could remain solvent only until 2030. The July 22 release offers some good news, too: the cash drain seems to have slowed, which means that CMS has apparently figured out how to stretch a dollar by slowing expenditure.

Nevertheless, Part A spending is growing faster than taxes are coming in to pay for the program, and the Part A coffers will be empty by 2030 unless the government takes action, according to the “2015 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.”

Part B and Part D accounts “are adequately financed because premium and general revenue income are reset each year to cover expected costs,” the report notes. “Such financing, however, would have to increase faster than the economy to match expected expenditure growth.”

CMS Vows to Transform the Health Care System

Despite the bleak outlook, CMS was quick to point out that spending growth averaged only 1.3 percent over the last five years, and that Part A expenditures were slightly lower than previously estimated. However, the agency noted that it still has more work to do to stabilize costs.

“Growth in per-Medicare enrollee costs continues to be historically low even as the economy continues to rebound,” said acting CMS Administrator Andy Slavitt in a statement. “While this is good news, we cannot be complacent as the number of Medicare beneficiaries continues to grow. That’s why we must continue to transform our health care system into one that delivers better care and spends our dollars in a smarter way for beneficiaries so Medicare can continue to meet the needs of our beneficiaries for the next 50 years and beyond.”

If Congress takes no action to correct Medicare’s depleting funds, the program will be able to cover just 86 percent of estimated expenditures in 2030, and only 80 percent of projected costs in 2050, CMS notes. “Policy makers should also consider the likelihood that the price adjustments in current law may prove difficult to adhere to fully and may require even more changes to address the financial imbalance,” the report states.

Resource: To read the Trustees’ Report in its entirety, visit www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR2015.pdf.